July 29th, 2021 | 10:25 CEST
Blackrock Silver, K+S, Barrick Gold - China first!
The Chinese government is demonstrating with all its might who has the last word. The regulation of industries and business models, which, as recently seen in the Chinese education sector, destroys the existence of companies and has weighed heavily on Chinese stocks in recent days. If the situation continues to escalate, it could easily negatively color the world's stock markets' mood. That is when it is worth looking at precious metals stocks, as they usually benefit disproportionately from rising commodity prices in times of crisis. Who will come out on top?
time to read: 3 minutes
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Author:
Carsten Mainitz
ISIN:
Blackrock Silver | CA09261Q1072 , K+S AG NA O.N. | DE000KSAG888 , BARRICK GOLD CORP. | CA0679011084
Table of contents:
"[...] Internally we expect the resource to significantly grow the deeper we mine. [...]" Dennis Karp, Executive Chairman, Manuka Resources
Author
Carsten Mainitz
The native Rhineland-Palatinate has been a passionate market participant for more than 25 years. After studying business administration in Mannheim, he worked as a journalist, in equity sales and many years in equity research.
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BLACKROCK SILVER CORP - Land area expanded enormously
Blackrock Silver is focused on exploring and developing projects in the "Silver State" of Nevada. The most significant, historic silver discoveries in the US state included the Comstock Lode and Tonopah Silver District in western Nevada within the so-called Walker Lane Trend. Blackrock Silver's larger project "Tonopah West" is located west of the Tonopah Silver District. Recently, the Company announced it had significantly expanded its land holdings to the north and west of its existing patented properties. Canadians have staked an additional 260 unpatented ore mining claims covering approximately 21 square kilometers, more than tripling the landholdings in this region!
The claims cover the northwest extension of the Pittsburg-Monarch fault system. This area has the most powerful veins in the Tonopah District. President and CEO Andrew Pollard commented on the important project progress, saying, "After one year and nearly 80,000 meters of drilling, we continue to gain a better understanding of this legendary mining camp, greatly expanding the potential for this project and our shareholders. We have now found ten high-grade ore veins with a cumulative strike length of more than six kilometers and are heading towards the release of our first resource estimate, which is expected in November."
Back in June, the Company enjoyed strong interest in a CAD 10 million capital increase, which was placed at a price of CAD 0.75. Currently, the share certificates are trading at a slightly higher level. At prices around CAD 0.83, the Company is currently valued at CAD 113 million. Given the good quality of the project and the further significant expansion of the area, the share is worth a closer look. The project has the potential to develop into a first-class silver discovery in the US state. Soon the share price should be significantly higher.
K+S AG - Profit increase due to higher prices
Rising prices on agricultural markets have enabled the fertilizer producer to rake in hefty profits. According to preliminary figures, operating profit (EBITDA) more than doubled to EUR 110 million in the second quarter. The MDAX-listed Group will publish its final figures on August 12. In May, CEO Burkhard Lohr raised the annual targets and formulated a target range for operating profit of EUR 500 to 600 million. In the previous year, the Germans posted EUR 445 million. However, analysts believe that K+S will exceed the bar it has set itself. On average, the experts forecast an EBITDA of EUR 640 million.
However, the higher prices seem to continue in the coming quarters. The Company reported that the recent price upswings were initially due to low volumes in the market, but more buyers are now prepared to accept higher prices for the fourth quarter. In addition, potash deliveries to major customers in India and China declined, putting them under pressure to conclude supply contracts for 2022 early. These developments should also give the Group a good fiscal year in 2022. The stock should continue its upward trend.
BARRICK GOLD CORPORATION - Wait mode
The share certificates of the world's second-largest gold producer have been moving in the CAD 26 range for quite some time. Even the good figures for the second quarter, which were published recently and showed that the Group would easily meet the annual targets set, could not free the price from its lethargy. The general conditions for precious and industrial metals are favorable. The valuation of the share with a 2022 P/E ratio of 16 is also moderate. Patience is a virtue. Investors can confidently make a basic investment with the heavyweight of the sector.
Rising commodity or precious metal prices are the impetus for higher share prices. Whether investors invest in Barrick Gold or Blackrock Silver in anticipation of rising gold and silver prices or bet on a price rally on the agricultural markets with K+S is a matter of taste. In our opinion, Blackrock Silver offers the most significant upside potential.
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